Investors Are Shorting CONN'S (CONN) Stock: Is A Short Cover Coming?

Zacks Equity Research
July 23, 2014

Many investors appear to be quite bearish on CONN'S, Inc. (CONN), especially if you look at the percentage of the float that is sold short for this stock. Currently, 34.25% of the float is sold short, suggesting an extreme level of bearishness for CONN.

While investors might be piling up against this stock for any number of reasons, it is important to note that CONN has seen some weakness as of late, as the security hasn’t been able to get into positive territory over the past four weeks, losing 11.92% in the time frame.

Better Trading Ahead?

While the short interest and the recent performance are certainly troubling, there is reason to be optimistic on this stock. Recent earnings estimate activity has actually been quite positive as of late, even in the face of such widespread pessimism.

Thanks to these rising estimates, we actually have a Zacks Rank #2(Buy) on CONN, so we clearly don’t believe in the negativity surrounding this firm. After all, it is hard not to be at least a little optimistic on the short term when you consider that 4 estimates have moved higher in the past 60 days compared to 1 lower in the same time frame, while the consensus has also increased.

Given this, a short-covering rally is certainly in the cards for CONN stock, especially if investors embrace the positive earnings estimate revision picture, suggesting that CONN could definitely move higher in the weeks ahead.

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